General

Will my Intraday positions get squared off due to margin shortfall? What effect will it have on my position?

Yes, your intraday position can be squared off if there is a margin shortfall. This happens when the trigger price is reached. Every Intraday position has a Trigger Price, which is calculated based on the difference between initial margin price at which you bought the stock and minimum margin required to hold your position.

If the stock’s Last Traded Price (LTP) drops below the Trigger Price, the system will check if you have any limits allocated to Equity If sufficient funds are available, system will first attempt to utilize those funds to maintain the position. If no additional limit is available: The system will automatically square off part of your Intraday position to match the position as per margin availability.

It is important to monitor your Trigger Price and ensure you have adequate margin to avoid automatic position closure. You can also add margins to your position and lower your trigger price in case of buy position and vice versa for sell position.

Let’s understand with an Example:

Trader A buys 1,000 shares at ₹100 each Current Limit 20,000

- Total Position Value: ₹1,00,000
- Margin Used (5x): Trader only needs ₹20,000 to buy the shares.

Breakdown of the Margin:

- Initial Margin = ₹20,000 (Required to initiate the trade)
- Minimum Margin = ₹15,000 (Required to keep your trade open)
- Trigger Price Calculation
(Initial Margin-Minimum Margin)/Qty
= (20000-15000)/1000
= Rs 5
= 100-5 = ₹95
So Trigger price is Rs 95

Now, if the stock price drops to ₹95, the trigger price will be hit, and the Margin left in the account will be ₹15,000.

System Action 1: Check for margin allocation under stocks, if margin of 4000 is available system will pull the margin and continue holding the position. If further margin not available system action 2 will be trigerred.

System Action 2:
The system will adjust your position based on the available ₹15,000.

1. Current Position Value:1,000 shares × ₹95 = ₹95,000
2. Required Margin (20% of ₹95,000): ₹19,000
3. But with ₹15,000 available, you can only hold a position worth ₹75,000.
4. Leading to shortfall of Rs.4000

New Position Size:
₹75,000 ÷ ₹95/share = 789 shares
Shares to Square Off = 1,000 – 789 = 211 shares

Final Result:
The system will square off 211 shares to make sure your position is within the available margin. The remaining 789 shares will stay open with revised trigger price of 89.90 for open position.